BPCL to shift LPG facility from Mumbai refinery; other refineries also to follow
September 14, 2018
State-run Bharat Petroleum Corporation (BPCL), which had a string of fire accidents this year at all its facilities, including the recent blasts at its flagship refinery here, is planning to shift the LPG facility out of the city to the nearby Rasayani, as part of its efforts to strengthen safety measures.
The second largest state-run refiner and oil marketer is also planning similar options for its other refineries in Kochi, and its joint venture refineries at Numaligarh in Assam and Bina in Madhya Pradesh as well, a top company official said here Tuesday.
"Will look at moving some of the related facilities, especially the LPG facility, to an alternate location for safety and commercial reasons," said D Rajkumar, chairman and managing director, BPCL.
The relocation of the LPG facility from the Mumbai refinery complex to Rasayani, which is around 60 km off the eastern waterfront, will be completed in the next two years, he said, adding this will help cut down truck movement near the refinery by as much as 43 per cent.
But Rajkumar, addressing the media after the AGM here late last evening, was quick to add that there is no plan to move the refinery itself to an alternate location.
BPCL's director for refineries, R Ramachandran, said the Rasayani facility over the years will attract Rs 36,000-38,000 crore of investments over the next few years as the company is also planning a petrochemical facility there.
"The investment plans are still at the drawing board level, except for the LPG facility which is already underway. We already have taken 250 acres and the entire plan will involve taking in an additional 500 acres. And thankfully land acquisition will not be an issue as the land was earlier an industrial plot," said Ramachandran.
The first phase will have the LPG bottling facility, followed by a poly-propylene block, and the second phase will have an enthoneyline plant, he added.
Rajkumar also said BPCL will invest around Rs 7,400 crore towards capital expenditure this fiscal year, of which around Rs 5,300 crore will be managed through internal accruals and the rest will be debt.
He said most of the capex will go into the upcoming petrochemical facility in Kochi as it will be focusing big on the petrochemicals sector going forward.
He also said the next focus area will be LNG and with the latest auctions, the company will have licences for 25 cities, up from the existing 14 cities. But he ruled out setting up an LNG terminal for now.
The Mumbai refinery had fire accident in July which left close to 50 employees injured, and a commercial loss of about Rs 97 crore. And the company attributed the incident to a material-related failure.
On the impending sanctions on Iran crude imports, Rajkumar said, the company has already sourced about 3.8-million tonnes (mt) of the 4.2 mt contracted for this year, and if need be, will take in the balance of 0.5 mt.
Rajkumar also said the refinery has not booked cargo from Iran since August.
"Last year, we imported 4.25 mt. Till September, we have imported 3.08 mt, that is around 73 per cent of what we have imported last year. Even if we really want to import, we will end up importing 0.56 mt more. That is the shortfall we can think of. We are hopeful that now there are alternative sources," he said.
He further said BPCL has already booked Louisiana crude recently and will continue to do so going forward.
"If it is going to work out economically for us to procure US crude, then we will do that. We believe that enough sources are available. Our refineries are versatile. We can process 108 types of crudes and we have 96 potential crudes in our baskets. I don't see any problem in sourcing crude even if it not going to come from Iran," he said.
When asked whether any direction from government on freezing petrol and diesel prices which are at a record high now, Rajkumar said, "There is no communication whatsoever from the government so far. We are passing on the spike in crude prices and there is no plan to absorb the hike at all."
BPCL is also developing an oil block in Brazil through a 50:50 joint venture with Videocon, which is at the bankruptcy court now. The chairman said the ongoing insolvency proceedings against Videocon will not have any negative impact on the future investments in this block.
On the Mozambique oil field joint venture, where the company has a 10 per cent equity consideration and has already pumped in over $700 million so far, Rajkumar said, the firm have entered into a legal framework with the government and will shortly be signing the final investment plan (around $22 billion) as well.